ProFrac (ACDC) - 2023 Q2 - Quarterly Report

Revenue Performance - Consolidated revenues for Q2 2023 were $709.2 million, an increase of$119.4 million from Q2 2022, while revenues for the first half of 2023 reached $1,566.7 million, up$631.9 million year-over-year [127]. - Stimulation services revenues for Q2 2023 increased by $31.7 million from Q2 2022, driven by a rise in average active fleets, with total revenues for the first half of 2023 at$1,398.4 million, up $485.7 million from the same period in 2022 [131]. - Proppant production revenues for Q2 2023 rose by$92.3 million year-over-year, totaling $109.8 million, while the first half of 2023 saw revenues of$192.0 million, an increase of $162.1 million from 2022, largely due to acquisitions [132]. - Manufacturing revenues for Q2 2023 decreased by$3.8 million from Q2 2022, totaling $31.1 million, but increased by$31.3 million for the first half of 2023, reaching $98.2 million [133]. Costs and Expenses - Total cost of revenues for Q2 2023 was$467.8 million, an increase of $128.6 million from Q2 2022, with stimulation services costs rising by$95.3 million year-over-year [136]. - Selling, general and administrative expenses for Q2 2023 were $70.3 million, up$17.3 million from Q2 2022, primarily due to higher labor and non-labor costs associated with acquisitions [139]. - Interest expense for Q2 2023 was $41.0 million, significantly higher than$13.4 million in Q2 2022, attributed to increased debt balances and interest rates [144]. Profitability and Net Income - The company reported a consolidated net loss of $4.6 million for Q2 2023, a decrease of$72.0 million from the same period in 2022, while net income for the first half of 2023 was $55.2 million, down$32.2 million year-over-year [127]. - Income taxes for the six months ended June 30, 2023, were $16.3 million, up from$4.5 million in the same period in 2022, resulting in an effective tax rate of 22.8% compared to 4.9% in 2022 [147]. Liquidity and Cash Flow - As of June 30, 2023, the company had $154.7 million in total liquidity, consisting of$18.1 million in cash and cash equivalents and $136.6 million available for borrowings under the ABL credit facility [150]. - Net cash provided by operating activities increased by$302.7 million to $387.2 million for the six months ended June 30, 2023, compared to$84.5 million in 2022 [153]. - The company anticipates that cash and cash equivalents, along with cash provided by operations, will be sufficient to fund capital expenditures and satisfy financial obligations for at least the next 12 months [151]. Capital Expenditures and Investments - Capital expenditures for the six months ended June 30, 2023, were $181.3 million, with a total expected capital expenditure of$300 million for the entire year [159]. - The net cash used in investing activities increased by $253.4 million, primarily due to a$204.6 million increase in cash paid for acquisitions [154]. - The net cash provided by financing activities decreased by $129.8 million, mainly due to a$301.7 million decrease in net proceeds from the issuance of common stock [155]. - Capital expenditures will be evaluated based on customer demand and expected industry activity levels [160]. Strategic Initiatives - The company acquired Producers for approximately $36.5 million and Performance Proppants for$462.5 million in early 2023, enhancing its operational capacity and market presence [128][129]. - The company is adopting a disciplined approach to capital allocation and has reduced its active fleets to align with customer activity levels, aiming to maintain profitability metrics per fleet [128]. - The company is exploring potential acquisitions and strategic transactions, which may impact liquidity needs [161]. - The company has $1.2 billion in aggregate principal amount of long-term debt outstanding, with$114.4 million due within the next twelve months [158].